Indian bonds nearly flat ahead of GoI’s INR110 billion auction, Trump’s Inauguration in focus

The Indian government bonds traded nearly flat Friday ahead of the Government of India’s bond auction worth INR110 billion later in the day.  Also, investors remain keen to watch the U.S. President-elect Donald’s Trump’s Inauguration Ceremony later in the day, for further direction in the debt market.

The yield on the benchmark 10-year bonds, which moves inversely to its price, fell 1/2 basis point to 6.47 percent, while the yield on super-long 30-year note gained 1/2 basis point to 7.04 percent while the yield on short-term 2-year note moved down nearly 1 basis point to 6.33 percent by 07:00 GMT.

The Government of India has announced the sale of following bonds amounting to Rs 110 billion on 20th January 2016 through multiple price based auction.Up to 5% of the notified amount of the sale of the stocks will be allotted to eligible individuals and Institutions in the auction.

It is worth noting that the benchmark 10-year yields fell nearly 160 basis points to 6.18 percent in 2016 as subdued inflation and negative impact of demonetisation raised expectations for the RBI rate cut. We at FxWirePro expect this is also likely to continue even in 2017.

Lastly, market participants are looking forward to the Reserve Bank of India’s first bi-monthly monetary policy meeting of 2017, scheduled to be held on February 7.

Meanwhile, the 30-share benchmark Sensex traded 0.43 percent lower at 27,191.02, while the 50-share benchmark Nifty futures traded 0.37 percent or 30.95 points down at 8,404.50 by 07:10 GMT.